$5bn Saudi investment firm eyes EU, US buys

Muscat, May 31, 2009

Saudi Arabia is exploring opportunities for investments in Europe, Asia and the United States in sectors including technology and auto parts for its new $5.3 billion investment company, its finance minister said.

The company, Sanabil al-Saudia, has not yet started operations but its owner, the state's Public Investment Fund, is already eyeing possible acquisition targets, Ibrahim al-Assaf told Reuters in an interview in Oman.

The Saudi government announced last year its intention to set up Sanabil with a mandate to invest in equities, bonds, real estate, foreign currencies and commodities in Saudi Arabia and abroad.

'We are looking at some opportunities from Europe, as well as Asia and the US. We are still in the stages of creating the company but this does not stop us from exploring these investments,' al-Assaf said on Saturday.

'We are looking at technology, also auto parts where we believe we have a competitive advantage when it comes to those components, especially plastic-based products.'

The minister declined to say when he expected the fund would make its first investment, but added any acquisition must benefit the Saudi economy, where the government is pursuing a $400 billion development plan in the next five years.

'We have so many opportunities inside the country. The evidence of that is that almost every month we are creating a new company owned by the public investment fund mainly to invest in the country,' al-Assaf said.

'Having said this, if we find a benefit from investing outside the country for our own economy's benefit, we will not shy away from it. If we find a company that could bring in value added in the form of technology, management, marketing then we will not hesitate.'

Some sovereign wealth funds and investment agencies in the oil-exporting Gulf have put new investments on hold as they wait for financial markets to stabilise enough for them to snap up cheap assets.

A number of them, including the Kuwait Investment Authority and the Abu Dhabi Investment Authority, have suffered big losses on equity investments in the United States as Western markets slumped due to the global financial crisis.

Asked if the world economy was through the worst, al-Assaf said: 'I think so, yes'. 'Unemployment in major economies could continue to increase for some time, but the huge collapse in both real production as well as in confidence, I think the worst is behind us.'

Some regional private equity companies have said long-term investors should look to re-enter the market toward the end of the year or early 2010.

In March, Qatar's sovereign wealth fund, one of the world's largest investors, put buying on hold for the next six months and said it will overhaul its strategy after that to focus more on energy and commodities.-Reuters